Thursday, October 1, 2009

Understanding the True Costs of CPSIA Testing Requirements

We've recently been challenged about our claims regarding the true costs of testing and whether our cost range of $300-$4,000 is correct. So, let's explore this topic a little closer.

First, some consumer groups seem to believe that clothes, wood products, and books have been exempted from testing requirements. In fact, this is not correct. Fabric, untreated woods and post-1985 books have been rendered exempt by the CPSC [pdf]. However, most clothing has some other notion on it, such as a button, snap, zipper, Velcro, etc., that would make the end product subject to the third party testing regulation. Wood that has paint or a finish on it or has exposed components such as screws or hinges must also undergo testing. Books printed prior to 1985 must be tested for lead. And, all toys must be tested for ASTM F963 (physical and mechanical tests) compliance. Although the CPSC's exemptions are helpful, we are hardly out of the woods. Most of our members will still be required to third party test for their products that are lead free.

And, although there have been non-toxic dyes and paints on the market for some time, they are not pre-empted from testing by the CPSC. Indeed, the testing requirements on paints and dyes are more stringent. Once paint, varnish, or any other surface treatment such as a silkscreen is applied to wood or fabric, the end product must be tested. One would hope that the CPSC would allow the common sense approach of component based certification, which would allow us to rely on testing of material components instead of finished products, but the CPSC has not yet approved this.

We have also heard consumer groups claim that the average cost per toy test is as low as $75. We agree this would be a more manageable fee, but reality again proves more severe. There may be a misunderstanding as to the type of testing that we are quoting. We are referring to third party testing in a CPSC certified laboratory. This is digestive testing, which destroys the sample, not XRF scanning of the product which keeps the sample intact (a method that we advocate). It should be noted that once the stay of enforcement ends on 2/10/10, digestive batch testing by a certified lab will be the ONLY approved testing method.

The oft-cited figure of $75 per test is actually the approximate cost of a digestive lead test on a single element of a product. Each zipper, button, screw, color of paint, or piece of trim is considered a separate element and each must be tested for lead. Each size or color of a toy is also considered a different product and must also undergo the same test even if the materials are the same. So, the cost of CPSIA-certified lead testing increases quickly depending upon the design of the product and how many tests it requires. Also, toys must be tested for phthalates and ASTM conformity, which can be even costlier to perform. And, under section 102(d)(2)(B) of the CPSIA, testing must be repeated, possibly as frequently as every year. We stand behind our estimates of $300 - $4,000 per item for CPSIA-compliant testing.

We strongly believe that this cost burden is untenable for small manufacturers. We recognize that toy safety is important and testing is a good tool to assure that consumers have access to safe toys, but we advocate a testing requirement that allows for XRF testing, component based certification and a reasonable ASTM test without driving the most conscientious, innovative and unique manufactures out of business. We are not against testing, just against redundant and burdensome testing.

XRF testing for lead would be much more affordable. In fact, a great majority of our members have utilized this technology in order to continue selling their product during the stay. The CPSC uses this methodology regularly as a screening technique and deemed it a “reasonable testing protocol”.

We also advocate for component based certification. This way, all of the raw materials that we utilize in our product lines would be tested prior to coming into our studios, thereby enhancing compliance up the supply stream. Manufacturers could then use these certifications to prove compliance under the law. Unfortunately, this is not written into the CPSIA. Nor has the CPSC ruled that these methodologies are compliant with the CPSIA.

Our goal at the Handmade Toy Alliance has always been to find a way to verify the safety of children's products without driving small manufacturers out of business. We still do not believe that most consumer groups want our businesses to fail, and we again call on them to join us in an honest discussion that begins with a realistic understanding of the issues posed by the CPSIA.

3 comments:

Thank you for this post. It is so important to understand that these very real costs will put many of us out of business. Here was the research I did on these costs in January. http://buggalove.blogspot.com/2009/01/cost-of-compliance-with-CPSIA-volume-2.html The component costs for finished products will still hold true to this quote. IF (and that's a big if) component testing is permitted, my costs will be significantly reduced as most of my components themselves (wood, paper) are exempt. While I would likely have to limit my product line, I might be able to remain in business. The non-exempt components will be more manageable to afford testing. Though one could argue they shouldn't NEED testing because they are all ASTM certified non-toxic and manufacturer has stated they are lead-free. Furthermore, XRF testing of all my current components cost me $500. A much more reasonable and managable business cost for a small business like mine. And with the recent findings of the CPSC regarding validity of XRF testing, allowing this type of test seems reasonable.

What advocates of the CPSIA don't realize is that the HTA and other like-minded business groups have no problem adhering to the strict saftey requirements of the law. The problem, frankly, is testing affordablility for small-batch producers. Small runs of product typically have higher quality control, but aren't able to take advantage of economies of scale, and therefore, are left to spread a $300-$4000 testing cost over as little as 2 to as much as 100 units per sku.

We are reasonable people who have no hidden agenda. I sincerely hope that Congress and advocates for the CPSIA will take a closer look at the unintended consequences of this law.

MOST of our small vendors WILL close their doors come Feb. once the stay is lifted --if there is not a positive ruling for component testing. We have been told by almost all of our small batch producers that the costs of testing run in the thousands--even MILLIONS for one producer based on the numbers of components on a single product and the large product assortment. To test an entire line will put these manufacturers out of business. For many, the costs of testing one single product is double their profit on the item. There is no way that the 3rd party testing costs can be passed along to the consumer without the pricing being $50 retail for a baby bodysuit. And who will be paying that? No one. They will be forced then to go out of business.

An alternative for some manufacturers would be to change their production of their items to have less components to reduce costs...but then the intrinsic value of their product is no longer unique and is more "mass produced". The creativity of small batch producers will be directly compromised if the law isn't amended.

It's absurd to think that small businesses can comply with the testing requirements even if the truth was it was only $75 per item.

On a side note, we have already lost four vendors of products in our store due to the requirements of batch labeling. So many more are trying to still figure out how to comply in an affordable, easy method. No one is even is discussing how labeling costs (in time and money) is resulting in closure of businesses....